Code for leasing business premises now a RICS professional statement

Following a consultation last year, the RICS (Royal Institution of Chartered Surveyors) has now launched the Code for leasing business premises, 1st edition (the Code).

Unlike previous versions the Code is now a RICS professional statement which includes mandatory requirements for RICS members and RICS regulated firms. The Code is effective from 1 September 2020.

The RICS notes that the objective of the 2020 Code is to improve the quality and fairness of the initial negotiations and to “promote the issue of comprehensive heads of terms (HoTs) that should make the legal drafting process more efficient”.

The mandatory elements of the Code are that:

• negotiations should be constructive and collaborative;
• parties that are unrepresented by an RICS member or other property professional must be advised by those parties that are so represented of the existence of the Code and must be given a recommendation that they obtain professional advice; and
• written HoTs must be issued, and must be marked subject to contract and deal with 16 prescribed points as a minimum (renewal HoTs can be shorter if the relevant terms are to be carried forward, subject to modernisation).

The rest of the Code indicates good practice.

The Code applies to lettings of premises in England and Wales to tenants who will carry on trade, professional or other business activities in those premises. It does not cover agricultural lettings, or premises that will only be used for housing plant and equipment or advertising media, premises that are intended to be wholly sublet by the tenant, or premises being let for a period of not more than six months.

A press release about the Code is here and a link to the document is here.